Leather Park feasibility study underway

SHARE | Tuesday, 16 December 2014 | By Kabelo Adamson

Experts from the Central Leather Research Institute (CLRI) - an Indian-based institution- are in the country to conduct the technical and financial feasibility of the proposed Leather Park Project to be constructed in Lobatse.

Their findings will ultimately lead to the commencing of construction of the leather park which is expected to save the country millions of Pulas in importation of leather and leather products as well as creation of thousands of direct and indirect jobs.

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CLRI team is engaged by the Local Enterprise Authority (LEA) to conclude the results of preliminary study conducted in 2012 by the authority to determine the feasibility of the leather project. The researchers would not only validate the results of the study but also determine its bankability.

A lead researcher from CLRI, Dr Chandra Babu, said on Thursday during Leather Park Stakeholder Consultation Workshop that they are here to validate the economic viability and bankability of the leather park, which will include assessing the current status, review of policy and institutional support and gap analysis.

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Part of the scope of their work, Babu said will be to determine the cost of the project, cost benefit analysis and socioeconomic viability including overall outcome analysis.

Additionally, the CLRI scientists will give recommendations on key policy and legal conditions and support systems precedent for the operation of the leather park. Though still validating the results of the feasibility study carried here, Babu said if raw material is utilised completely within the country to produce leather it can lead to creation 10,000 jobs and export earnings of minimum of US$150 million in addition to fulfilling local demands.

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Babu told the workshop that there are several inputs that lead to the success of the leather industry; one of them being discouraging the export of raw materials (hides and skins) by imposing higher tariffs and also imposing duty free import of raw materials.

The research team will complete their validation on New Year’s Eve this year and present their findings by the end of January in 2015. The Leather Park to be set up in Lobatse will revive the leather industry after the collapse of Tannery Industries Botswana (TIB) in 2010.

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In the past there were tanneries in Lobatse, and Pilane which have all collapsed due to environmental related challenges as they lacked one of the most critical machineries of the industry, the Effluent Treatment Plant.

Following the closure of the tannery industries, the country had to endure the burden of importing close to P150m worth of leather and leather products while exporting only P60m worth of leather.

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The proposed leather park, which has been included in the NDP 10, will cost approximately P225 million. Construction of the park is expected to start in the 2015/16 financial year. After completion the leather park is projected to employ more than 5000 people, mainly at the tannery and production stage.

Local Entrepreneurship Authority’s Deputy CEO for Client Service, Cosmos Moapare, said the establishment of the leather park in Botswana was necessitated by the desire to resuscitate the industry due to the demand of the leather locally as clients had to rely on importing leather.

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He said the establishment of the leather park has been validated by the preliminary feasibility study carried by LEA, which revealed that the population of cattle in Botswana stands at 2.5 million with 1.8 million goats and 300 000 sheep.

He said Lobatse was chosen as the site of the leather park due to various factors among them its housing of the largest abattoir in the country, the Botswana Meat Commission (BMC). Moreover that the skills set from the BMC Wet blue tannery which is now defunct will be utilised.

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Moapare said following the feasibility study conducted in 2012, in November 2014 the government then agreed to include the project under the NDP 10 as it was considered one of the priorities. The government will start the project and later divest and hand over to the private sector after a certain period.

When officially opening the stakeholder consultation workshop, the Minister of Trade and Industry Vincent Seretse said the construction of the leather park will ensure that the country transitions to the next level of development, propelling it from a factor driven economy to an efficiency economy.

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“This initiative will go along the development and deepening of the leather sector value chain and consequently contribute to the broadening of our industrial base,” Seretse said.

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The minister said the development of the leather sector will provide an opportunity for Small, Medium and Micro Enterprises (SMMEs) to participate in the various activities along the value chain.